MySpace Shuffles Top Management
April 23, 2009 at 7:02 AM (PT)
NEWS CORP. has confirmed the departure of MYSPACE Co-Founder/CEO CHRIS DEWOLFE, a move that followed the hiring of former AOL CEO JON MILLER as NEWS CORP.'s new Chief Digital Officer. The NEW YORK TIMES also reports that Co-Founder and current MYSPACE Pres. TOM ANDERSON is in discussions about a continued role at the company.
The moves do not come as much of a surprise to industry observers, who note that MYSPACE has fallen short of expectations after being acquired by NEWS CORP. for $580 million in 2005. FOX INTERACTIVE MEDIA, in which MYSPACE is the largest piece, fell an estimated 10% short of a revenue projection of $1 billion.
MYSPACE's popularity has also been tempered by the rise of FACEBOOK and TWITTER. "At some point NEWS CORP. has to look at the investments and the current management team," SANFORD C. BERNSTEIN & CO. analyst MICHAEL NATHANSON, told the TIMES. "It doesn't surprise me in the least."
In the most recent quarter, FOX INTERACTIVE MEDIA generated $226 million in revenue, down 3% from a year ago. Operating income declined from $47 million to $7 million in the same quarter last year because of higher costs associated with introducing new features at MYSPACE, including a music service.
Ominously, MYSPACE's $300 million search advertising deal with GOOGLE expires next year. "The company then has a potential black hole in terms of profitability," NATHANSON said.
DEWOLFE will remain on the board of MYSPACE CHINA and act as a strategic advisor to the company. MILLER plans to announce a new management structure for MySpace "in the near future," the company said.